For transport and logistics industry experts, spring is always associated with increased transportation volumes of certain cargo groups such as seeds, pesticides, and fertilizers – everything connected with the season of sowing.
In lower-latitude countries like Iran, spring begins a little earlier than in its northern neighbors. For these countries’ agrarians, the end of February marks the beginning of a period that is challenging due not only to the quantity of work demanded but also to often unhelpful weather conditions. Iran typically produces enough grain to supply its domestic market, but the grain processing sector depends heavily on imported raw materials. So, in 2017, Iran became the world’s third largest importer of barley after Saudi Arabia and China. Russia supplied a quarter of Iran’s imported raw materials.
Regarding the particulars of grain transportation between Russia and Iran, we talked with Mohammad Sadeghikhorabadi, Iran Country Manager at AsstrA-Associated Traffic AG.
Mohammad, do you note an increase or decrease in demand for grain transports between Russia and Iran? What is driving it? What forecast could you give for the market in the near future?
I can definitely say that the volumes of grain purchased in Russia for further export to Iran are growing. Even requests from our customers point to this growth: recently, we received practically simultaneous requests from two different clients for the transportation of barley and lentils from Saratov and Volgograd to Iran. The total volume of cargo transported was about 3,500 tons. And we regularly receive similar requests for grain transportation along this route. This increase in interest in the Iranian market is primarily due to weather conditions. At the end of February, the Iranian National Center for Crisis Management reported droughts across 97% of the country. Under such conditions, it is already extremely unlikely that the crop harvested in July will be able to meet domestic Iranian demand. That is not to mention the country's flour mills, whose demand is only half satisfied by Iranian grain even in good years. Therefore in the near future we expect an increase in shipment quantity and volume for not only barley and lentils but also wheat, rice and other crops.
In recent years, Iran has introduced several bans on imports of agricultural products, including wheat. How does this affect the volume of freight?
Iranian agricultural import restrictions are changing. In November of last year, the ban on rice imports was lifted. And just three weeks ago, Iran, Russia and Kazakhstan concluded a tripartite agreement on the wheat trade that allows the imported grain to be re-exported after processing. The two-year-old ban on imports for domestic consumption remains.
Mohammad, in terms of logistics, do you transport grain with containers or tents? Which option is more cost-effective for customers?
It depends on the place of loading. In the case of Saratov, it has been more affordable to transport barley by truck. Thus we offered the client the option of transporting grain in 20-ton refrigerated trucks. In the case of Astrakhan, of course, we’ve chosen sea transportation, but with a special feature: we transport grain in bulk, not in containers. In general, the transport mode affects grain shipping costs and therefore the final consumer price of the grain.
What formalities and difficulties must you manage during the transportation of grains to Iran?
From a legal point of view, the transportation of grains requires a sanitary certificate, all relevant accompanying documents, and bills of lading. If the client does not want to spend time completing the documentation, we take care of it for him. Experience working with Iranian companies greatly eases and speeds up the transportation process.
From a practical point of view, the main difficulty for logistic operators handling the Russia -Iran route is the lack of cars, ships, or free customs warehouses in ports. But in our case, due to our extensive network of reliable contractors, AsstrA can always offer each customer the right delivery option.
AsstrA Grain Logistics Department Manager Alexei Sorokin describes AsstrA’s agricultural sector offerings:
This Department’s team carries out the international transportation of grain crops to the EU, CIS, and Asia. We offer road, sea and river transportation of grain in bulk or in containers, railway transportation in specialized grain wagons, as well as trading operations for grain and oilseed cargo. In 2017, the volume of barley, malt, wheat and other grain groups transported by AsstrA increased by 40% compared to 2016. We plan to maintain the Department’s pace of development in 2018 as well.